Haffke v. Signal 88, LLC
| Decision Date | 31 July 2020 |
| Docket Number | No. S-19-667.,S-19-667. |
| Citation | 306 Neb. 625,947 N.W.2d 103 |
| Parties | Nathan HAFFKE, appellant, v. SIGNAL 88, LLC, a Delaware limited liability company, appellee. |
| Court | Nebraska Supreme Court |
Kelly K. Brandon, Omaha, Aimee C. Bataillon, and Stephanie J. Costello, Gretna, of Fiedler Law Firm, P.L.C., for appellant.
Ruth A. Horvatich, Aaron A. Clark, and Cody E. Brookhouser-Sisney, of McGrath North, P.C., L.L.O., Omaha, for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
This appeal concerns Nathan Haffke's termination of employment by Signal 88, LLC, which led to Haffke's claim of retaliation under the Nebraska Fair Employment Practice Act (NFEPA)1 and defamation. The district court granted Signal 88 a directed verdict on Haffke's defamation claim, and a jury found Haffke failed to prove his retaliation claim. On appeal, Haffke challenges a jury instruction for retaliation that required Haffke to have opposed or refused to carry out a practice of Signal 88 "that is unlawful." Haffke also challenges the applicability of a jury instruction on the business judgment rule in an employment action. Finally, Haffke claims the district court should not have reached the issue of whether he sufficiently pleaded or proved special damages on his defamation claim when Signal 88 did not raise compliance with Neb. Rev. Stat. § 25-840.01 (Reissue 2016) as an affirmative defense. For the reasons set forth herein, we affirm.
Signal 88 is a security service franchisor and sells franchises of mobile security services to business owners. As a franchisor, Signal 88 is required to comply with the Federal Trade Commission's franchise rules, including the preparation of a franchise disclosure document (FDD) that is provided to prospective franchisees as part of the sale process. Under item 19 of an FDD, if a franchisor is going to provide a potential franchisee with a financial performance representation, such representation is generally required to be disclosed in the FDD. Haffke testified that Signal 88's FDD's at issue in this case stated:
Other than the information provided in this Item 19, we do not furnish or provide prospective franchisees any oral or written information concerning the actual or potential sales, cost, income or profits of a franchise business. Actual results vary from unit to unit. We cannot estimate the results of any particular franchise.
Haffke began working for Signal 88 in December 2014 as vice president of franchise development. Haffke was responsible for managing a team of contractors and promoting the sale of security services.
Signal 88 terminated Haffke's employment in March 2016, and the parties allege differing reasons for this termination.
Haffke claims he was terminated for alerting Signal 88 it was engaging in unlawful transactions and refusing to participate in those transactions. In his appellate brief, Haffke points specifically to two allegedly unlawful transactions: (1) a Signal 88 independent contractor providing a potential franchisee with a business plan that included a profit-and-loss statement not included in item 19 of the FDD, and (2) an expansion program in which Signal 88 engaged with members of an existing franchisee company to expand with different territory and pricing under a newly formed company and purchase the existing franchise without providing an updated FDD. Signal 88, in turn, alleges Haffke's employment was terminated due to poor performance, including his communication issues in the leading of his team, unsatisfactory sales performances, and stated disbelief in Signal 88's 5-year company plan.
As part of Haffke's termination from employment, Signal 88 provided a severance agreement and an independent contractor agreement to continue a relationship in which Haffke would sell franchises for Signal 88. Although Haffke initially signed both documents, he soon after revoked the severance agreement, alleging the termination was wrongful. A day after Haffke informed Signal 88 of his revocation of the severance agreement, Signal 88 also terminated the independent contractor agreement.
Haffke filed a claim with the Nebraska Equal Opportunity Commission in July 2016, alleging retaliation. Signal 88 amended its FDD to make the necessary disclosure of Haffke's employment action, and this amendment was included in a copy of the FDD issued April 19, 2017, which stated:
Haffke v. Signal 88, LLC - Neb 1-16/17-7-48152-S. Nathan Haffke filed a charge of retaliation with the Nebraska Equal Opportunity Commission (NEOC) on or around July 27, 2016. In his Charge, Haffke contends that the Company retaliated against him after he made protected whistleblower complaints relating to the lawfulness of certain alleged Company activities. Haffke was, however, terminated from his employment due to his poor performance. The charge is currently in the investigation stage with the NEOC.
On July 12, 2017, Haffke sent Signal 88 a letter taking issue with the FDD's statement that Haffke was terminated from employment "due to his poor performance." On August 2, Signal 88 revised the April FDD to state:
Haffke v. Signal 88, LLC - NEB 1-16/17-7-48152-S. Nathan Haffke filed a charge of retaliation with the Nebraska Equal Opportunity Commission (NEOC) on or around July 27, 2016. In his Charge, Haffke contends that the Company retaliated against him after he made protected whistleblower complaints relating to the lawfulness of certain alleged Company activities. It is the Company's position that Haffke was separated from his employment for lawful reasons. The charge is currently in the investigation stage with the NEOC. Haffke seeks compensation for back pay and mental suffering.
Haffke filed a complaint with the district court in October 2017. Under the first count, Haffke claimed Signal 88 violated the NFEPA by retaliating against him for his whistleblower actions. Specifically, Haffke alleged Signal 88 impermissibly retaliated against him by terminating his employment and revoking the subcontractor agreement because he alerted Signal 88 to company actions he reasonably and in good faith believed were unlawful "violations of federal/state franchise law[,] Nebraska's Uniform Deceptive Trade Practices Act[,] and Nebraska's Consumer Protection Acts," as well as wiretapping laws.
Under the second count, Haffke claimed defamation extending from Signal 88's publication of the April FDD. Haffke argued the statement that he was "terminated from his employment due to his poor performance" was untrue, unprivileged, unlawful, and slanderous per se due to the implication that he was a poor performer and unfit to carry out employment duties. Haffke explained that "[u]pon learning of the defamatory disclosure, [Haffke] immediately sent a request to Signal 88 ... pursuant to [§] 25-840.01 to retract its untrue statements contained within the FDD," but that "[a]t the time of this filing, the statement has not been retracted and Signal [88] has not released an amended FDD." Haffke alleged he was "damaged in lost wages and income, lost fringe benefits, damages to his reputation, mental and emotional distress, humiliation, and future lost income."
Signal 88 filed an amended answer contesting Haffke's complaint. On the defamation claim, Signal 88 admitted Haffke had "requested that Signal 88 retract the statement [in the FDD] that he was terminated from his employment due to his poor performance" but denied the allegation that the statement had not been retracted and Signal 88 had not released an amended FDD. Additionally, Signal 88 listed various affirmative defenses in its answer, including that Signal 88 "has complied with all applicable statutes and regulations and, thus, ... has not defamed [Haffke]" and that Haffke "did not suffer damages or harm attributable to the action or inaction of [Signal 88] as alleged in [Haffke's] complaint."
A jury trial was held in June 2019. At the close of evidence, Signal 88 moved for a directed verdict, which the district court denied as to the retaliation claim. Regarding defamation, the court determined that § 25-840.01 applied and that, as such, Haffke was required to plead or prove special damages. Because Haffke failed to plead or prove special damages, the court granted Signal 88 a directed verdict on the defamation claim.
The district court provided a jury instruction on the remaining retaliation claim. As applicable to the current appeal, jury instruction No. 8 stated, in relevant part:
As to the first requirement under instruction 8, jury instruction No. 9 further explained:
Jury instruction No. 12 instructed the jury regarding the business judgment rule and provided: "You may not return a verdict for the Plaintiff just because you might disagree with the Defendant's decision to terminate Plaintiff's employment and/or deny the independent contractor agreement or believe it to be harsh or unreasonable."
The matter was submitted to the jury. The jury entered a verdict in...
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